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Global commerce company eBay Inc. (EBAY) was founded in 1995 as an auction site. Since then, the company has grown into a major online marketplace for peer-to-peer sales operating in 190 markets globally, and has enabled $74 billion of gross merchandise volume in 2022.Enhancing experience by utilizing the latest technology to empower sellers and buyers and building the trust of customers has been an integral part of the strategy of the online marketplace.
In 2020, EBAY launched its Authenticity Guarantee program, which draws on independent experts to vet and verify items sold on the platform. It was followed up with the debut of an authentication service for luxury handbags that allowed customers to get professional authentication for new and pre-owned handbags from luxury brands such as Saint Laurent, Gucci, and Balenciaga.
Even EBAY’s acquisitions reflect the platform’s unwavering focus on building trust while it increases its penetration in the fast-growing pre-loved segment to differentiate itself from numerous peers focusing on new and largely in-season goods.
As a result, after acquiring marketplace compliance solution 3PM Shield in February 2023 and used-sporting-goods marketplace, SidelineSwap earlier this month, on May 15, EBAY signed a definitive agreement to acquire Certilogo, a provider of AI-powered apparel and fashion goods digital IDs and authentication.
The acquisition is subject to the satisfaction of customary conditions, including regulatory approvals, and is expected to be closed in the third quarter.Certilogo’s platform uses digital technology to tag products with virtual IDs, or “product passports,” that enable traceability and protection against counterfeits. It empowers brands and designers to manage the lifecycle of their garments while providing consumers with a seamless way to confirm authenticity, access reliable information about branded items, and easily activate circular services.
According to Charis Marquez, VP of EBAY, “Certilogo’s technology and talented team allows eBay to build on this commitment, establishing eBay as a leader in pre-loved fashion and offering new ways for consumers to connect and engage with brands.”
Despite ten consecutive interest-rate hikes by the Federal Reserve in just over a year, the red-hot and decades-high inflation is yet to be sufficiently tamed. Amid the rising cost of living crisis, the appetite for second-hand goods has witnessed phenomenal growth, especially among young shoppers.Moreover, with increasing awareness and emphasis on sustainable consumption, the stigma surrounding pre-owned goods has all but disappeared while community and circularity have been embraced.
Unsurprisingly, ThredUp’s annual Resale Report showed that the global pre-owned apparel market is set to double by 2027 to $351 billion — 9 times the growth of the broader retail sector.
However, the concern of ending up with counterfeited goods has fueled the trust deficit and has emerged as a significant roadblock preventing greater adoption. The global market trading in fake goods is worth a staggering $4.5 trillion, with faux luxury merchandise accounting for up to 70 percent ($1.2 trillion), according to a 2019 Harvard Business Report.
Even Washington has expedited its crusade against dupes. It has also received legislative firepower through INFORM Consumers Act, which modernizes consumer protection laws and requires web marketplaces to collect and verify basic business information from sellers before they are permitted to sell online. Moreover, SHOP SAFE Act incentivizes platforms, such as EBAY, to follow best practices for screening and vetting vendors and the products they put up for sale, and forces them to address repeat-counterfeit-sellers.
Given the political emphasis on building and retaining consumer trust, the importance of Certilogo’s assumption can hardly be overstated.This acquisition would also benefit EBAY’s ecosystem by offering fresh opportunities for small businesses to engage with consumers. By assuring their customers of the legitimacy and sustainability of their products, these businesses could be benefited by improving toplines, driven by repeat purchases from loyal customers.
Lastly, with EBAY’s earnings report last month showing increased traction in the luxury sector, with in-focus categories including watches, handbags, jewelry, and sneakers, its acquisition of Certilogo keeps it well-positioned to keep building momentum.

Video game retailer GameStop Corporation (GME), the signature meme stock, had previously been riding some short-term momentum. However, that has since leveled out, and the company has been making progress in right-sizing its business by slashing its inventory levels and reworking its cost structure.Moreover, the company is undergoing a transitional period by halting its e-commerce efforts and focusing on its brick-and-mortar locations. Furthermore, GME makes changes to its rewards program. Also, GME stock might get a significant boost if there is a ban on short selling.
GME is expected to release its fiscal 2023 first-quarter report on June 7. The quarterly report should show reflect the drastic measures the company has been undertaking to achieve considerable profitability this year.
Let’s discuss the catalysts that could send GME’s stock price to fresh heights:
Favorable Fourth-Quarter Earnings
For the last fiscal year’s fourth quarter, the video game retailer posted its first quarterly profit in two years and surpassed analysts’ expectations for revenue. Its aggressive cost-cutting measures and strong demand for video game hardware in the holiday quarter helped the company become profitable.
For the quarter that ended January 28, 2023, GME reported a profit of $48.20 million, or $0.16 per share, compared to a loss of $147.50 million, or $0.49 a share a year earlier. Adjusted earnings of $1.16 a share beat analysts’ projections of a loss of $0.13 per share.
For the fourth quarter, the company’s net sales dropped slightly to $2.23 billion from $2.25 billion in the year-ago quarter. However, the figure was higher than analysts’ estimates of $2.18 billion.
The video game company had been working vigorously to steer itself back to profitability and partially got there by slashing its inventory levels and costs. Its selling, general, and administrative expenses were $453.40 million for the quarter, or 20.4% of sales, compared to $538.90 million, or 23.9% of sales, in the year-ago period.
Like many retailers, GME struggled with supply chain delays that left the company with a backlog of inventory after it previously tried to meet strong demand. Based on its fourth-quarter balance sheet, the company had $682.90 million in inventory, down from $915 million a year ago.Furthermore, GME has been trying to improve its cash balance as a part of its revival strategy. The company’s cash and cash equivalents for the quarter were $1.39 billion.
“GameStop is a much healthier business today than it was at the start of 2021,” CEO Matt Furlong said on a call with analysts. “We have a path to full-year profitability.”
Shifted Focus from E-Commerce to Brick-And-Mortar Sales
Ryan Cohen took over GME in 2021, aiming to transform the struggling video game retailer into an e-commerce juggernaut. Unfortunately, the company’s e-commerce sales failed to take off. GME’s losses widened, and Cohen’s new online-sales executives resigned.As a result, GME began cutting costs. The company canceled plans to build additional warehouses, closed a new e-commerce customer-service center, and laid off many corporate employees hired under the management of Cohen. Also, according to former GME executives and analysts, Cohen miscalculated what customers were prepared to pay through its website and app.
“Quarter after quarter we were unsuccessful with new ventures,” commented Ted Biribin, GME’s former employee. “If something didn’t work, senior leadership would go onto something else very quickly.”
GME’s CEO, Matt Furlong, stated in an internal memo last year, “Our stores, in particular, are a differentiator that will help us maintain direct connectivity to customers and position us to have localized order fulfillment capabilities across more geographies. While we continue evolving our ecommerce and digital asset offerings, our store fleet will remain critical to GameStop’s value proposition.”
GameStop is poised for solid growth as the company has stopped focusing on e-commerce sales. Consequently, the company can now provide more support for its 4,400 brick-and-mortar stores. GME also introduced an initiative to motivate the company’s staff.
Last year, the company announced an “improved compensation” scheme for its brick-and-mortar video game store’s most senior employees. For Assistant Store Leaders and Senior Guest Advisers, the compensation comes as an undisclosed rise in their hourly pay. For Store Leaders, it comes in the form of $21,000 worth of GME stock (vested for three years) on top of their regular pay, coupled with “the opportunity to earn additional compensation every quarter by hitting goals for performance-based equity grants.”
GME’s focus on physical stores resulted in the company reporting a quarterly profit for the first time in two years. For the full fiscal year 2022, expenses were reduced by more than $100 million.
GME’s Membership Program Getting a Huge Makeover
GME offers incentives to members of its rewards program to secure customer loyalty. To that end, the company is seemingly making significant changes to its customer loyalty program. The existing PowerUp Rewards membership will have its name changed to GameStop Pro, with the price going up from $15 per year to $25.
GameStop Pro will access some special perks through this new program. Among other incentives, members will get bigger discounts on collectibles, pre-owned games, GameStop brand gear, clearance items, and more. GameStop Pro is expected to roll out on June 27, with existing memberships being phased out as they come up for renewal.
GME’s revised customer loyalty program could enhance profitability and growth for the company.
Prohibition on Short Selling Could Send GME To New Highs
The practice of short selling has come under increased scrutiny amid the recent banking turmoil. Short selling is a well-known strategy in which financial traders bet that the price of a stock will go down. Short sellers largely profited from the banking crisis by borrowing shares they expected to fall and repaying the loan for less later to pocket the difference.
In March 2023, Wachtell, Lipton, Rosen & Katz, a law firm known for representing large companies in mergers and against attacks from hedge funds, called on U.S. securities regulators to restrict short sales on financial institutions. Also, the calls from Capitol Hill and elsewhere to prohibit short-selling have gotten louder lately.
With more regulators and lawmakers ramping up their calls for an outright ban on short selling, investors should prepare for potential legal changes. As traders anticipate this possibility, GME stock could get squeezed higher quickly. The r/WallStreetBets crowd might start a massive short squeeze in anticipation of a potential short-selling ban.
How Should Investors Approach the Stock
The stock has risen 33.5% year-to-date, beating the 11.5% gain in the S&P 500 index. Moreover, shares of GME have gained 20.1% over the past month and 32.1% over the past three months.
As investors think the company can pull off a successful business turnaround, GME stock has risen recently. The video game retailer has essentially pivoted its focus to brick-and-mortar sales instead of e-commerce sales with an eye on improving profitability. The shift already resulted in its first quarterly profit in over two years.
Moreover, the revised customer loyalty program, GameStop Pro, is a smart move that could bolster the company’s top-line results in 2023. At the same time, a potential ban on short selling could prompt a massive final squeeze for GME stock. Now, all eyes are on GME’s first-quarter fiscal 2023 earnings, to be released on June 7, after the market close.
Over the past few years, stock traders and price chasers have targeted GME, but sensible investors should avoid emotional trades and monitor the company’s financial and operational progress.
Investors could also keep tabs on the buying activity of GME’s insiders. After all, if the company’s insiders express their confidence through share purchases, that is probably a positive sign for the stock. Director Larry Cheng recently purchased 5,000 shares of GME worth about $114,000. Following this purchase, Cheng now owns a total of 44,088 shares.
While many strong forces propel GME, investing in the stock still involves a high level of risk. Investors should continue to expect GME stock to remain volatile (with a 24-month beta of 1.90), and it is not appropriate to pour their entire account into this one stock.Though it is advisable to take a small position in GME stock, as it may be on the cusp of a breakout, and the share price is likely to shoot higher in the near future.

More than a year has passed since an announcement on April 26, 2022, by Ford Motor Company (F) CEO Jim Farley, regarding the company’s intent to challenge Tesla, Inc. (T) as the global EV leader.
Since then, the Detroit automaker has made huge strides in the electric mobility space. It has pipped TSLA to the pickup segment by beginning production of its F-150 Lightning and benchmarked the Model Y for its Mustang Mach-E crossover. While TSLA is still the runaway leader, F notched 61,575 fully-electric vehicle sales to emerge as the challenger in the U.S., something the legacy automaker planned to achieve by mid-decade.
Since both rivals are expected to battle it out for a greater share of the electric-mobility pie, it is understandable why an unexpected announcement by the CEO of both companies to join hands to enlarge the pie took the industry and markets by pleasant surprise.
On Thursday, May 25, during a live audio discussion on Twitter Spaces, Jim Farley and Elon Musk announced an agreement on charging initiatives for Ford’s current and future electric vehicles. Under the agreement, current Ford owners will be granted access to more than 12,000 Tesla Superchargers across the U.S. and Canada starting early next year.
Moreover, the next generation of Ford EVs, expected by mid-decade, will include TSLA’s charging plug, enabling owners to charge their vehicles at Tesla Superchargers without an adapter while using Ford’s software.A separate Ford spokesman later added that pricing for charging “will be competitive in the marketplace.” The companies will disclose further details closer to a launch date, anticipated in 2024.
Following this announcement, which makes F among the first automakers to explicitly tie into the TSLA network, the former’s stock rose by 6.2% on May 26, closing at $12.09 per share, while the latter’s shares also climbed by 4.7%, ending the week at $193.17.In this article, we elaborate on why the optimism makes sense.
Firstly, as F is ramping up its production to double its EV capacity this year and looks on course to get to two million in a couple of years, with public charging of electric vehicles being a major concern for potential buyers, charging infrastructure is going to be critical for the company in order to ensure that it delivers a superior after-purchase experience to its customers.
TSLA is the only automaker that has successfully built out its own network of fast chargers, which gives the EV leader an edge over its competitors, whose partnerships with third-party companies have left much room for improvement in reliability and reach.However, with the announcement, F has managed to more than double its existing capacity of 10,000 fast chargers with 12,000 well-located TSLA Superchargers. Moreover, leveraging TSLA’s superior NACS charging technology is F’s attempt to ensure that it is on what Elon Musk has described as “equal footing” in its completion with the incumbent.
Secondly, opening up 12,000 Superchargers in its network of currently 45,000 connectors worldwide at 4,947 Supercharger Stations could benefit TSLA in multiple ways.
White House officials announced in February that TSLA has committed to open up 7,500 of its charging stations by the end of 2024 to non-Tesla EV drivers. The agreement with F would help the company make progress on that front.
By diversifying from being a competitor to doubling up as an infrastructure provider, the EV leader has hedged its bets to benefit from the increasing presence of legacy automakers in the electric mobility space.
While the company is expected to dominate EV sales in the foreseeable future, the revenue from its Supercharging stations, which is included under the “services and other” segment, is also expected to witness remarkable growth due to increased network utilization by non-Tesla EV drivers.
Lastly, but perhaps most importantly, this partnership could be the initiation of the strategic masterstroke that impacts the entire EV ecosystem. As discussed earlier, while TSLA uses NACS charging technology, the rest of the industry has adopted relatively-slower CCS charging.
With two-leading EV manufacturers joining hands and F being ‘totally committed’ to a single U.S. charging protocol that includes the Tesla plug port, EV strategies of other auto manufacturers, such as GM and STLA, could come under increased pressure.
According to Jim Farley, the others “are going to have a big choice to make. Do they want to have fast charging for customers? Or do they want to stick to their standard and have less charging?”
In this context, it wouldn’t be surprising if Musk’s statement, “Working with Ford, and perhaps others, can make it the North American standard, I think that consumers will be all better for it,” turns out to be the beginning of yet another victory lap for the illustrious CEO.

Just before the shares of NVIDIA Corporation (NVDA)got their moonshot post its earnings release on May 24, we discussed how the race to dominate the AI domain is gaining pace. In this article, we will look at another bus to that to which investors are rushing to hop on board: Marvell Technology, Inc. (MRVL).
While NVDA has clearly stolen the thunder over the past week by becoming the first semiconductor company to reach a trillion-dollar valuation, MRVL’s stock also hogged headlines. It surged by 32% after it surpassed top and bottom line estimates in the first quarter of fiscal year 2023, according to its May 25 earnings release.
However, given that the supplier of data infrastructure semiconductor solutions also witnessed 8.7% and 41.1% year-over-year declines in its quarterly revenue and non-GAAP net income to $1.32 billion and $264.2 million, respectively, it was not past performance, but the company’s bullishness regarding its future prospects that got reflected in the stock’s remarkable price action.
While informing analysts that the company had begun to reassess the “tremendous” business potential of AI, MRVL’s CEO Matthew Murphy said, “In the past, we considered AI to be one of many applications within cloud, but its importance and therefore the opportunity has increased dramatically.”MRVL’s favorable position to capitalize on the tailwind of increasing investments in AI originates in two acquisitions, which, in hindsight, have turned out to be key.
The first of them was a 2019 acquisition of Avera Semi, a spinout of Global Foundries, which contributed to MRVL’s custom chip designing and large-scale Application-Specific Integrated Circuit (ASIC) computing capabilities.
This was followed by a 2020 acquisition of Inphi, which had built a leading high-speed data interconnect platform uniquely suited to meet the insatiable demand for increased bandwidth and low power for both AI Clusters and traditional cloud infrastructure.
However, what was already a growing market share took a quantum leap late last year with the release of ChatGPT, which marked an inflection point for generative Artificial Intelligence (AI) and Large Language Models (LLMs).
With AI, if it isn’t already there, becoming a ubiquitous force majeure that’s touching and shaping every aspect of our modern lives, the traditional ratio of conventional processing through CPUs to accelerated computing through GPUs of 95% to 5% is destined to get inverted with the former component finding greater usage for control than execution.
Moreover, with the ever-increasing adoption of AI, the demand for increased computing power would drive demand for high-speed networking technology and optical productivity, which has been MRVL’s forte.
With triple levers of accelerated computing, data center usage, and high-speed networking to bank on, MRVL was able to quantify its revenue from AI during its recent earnings call. According to a note from Citi’s Atif Malik, “In FY2023, MRVL estimated its AI revenue to be ~ $200 million, representing a strong uptick from FY22. The company expects AI sales to reach ~$400M+ in FY24 before doubling in FY25.”
Bottom Line
According to Bill Gates and a few notable others, we overestimate change in the short term and underestimate it in the long term.The company’s lack of meaningful share repurchases during the previous quarter, despite its clear visibility on stellar growth prospects, makes us wonder if the glowing outlook was a signal to investors or noise to mask top and bottom-line declines.
However, from the perspective of both the current business and the pipeline of opportunities, the substance behind the hype is undeniable.Hence, since we may be at the beginning of a 10-year cycle of AI-driven semiconductor growth, it could be wise for investors to load up on the stock once the current wave of excitement ebbs and there’s more valuation comfort to buy in for the long haul.

Every year, on the last Monday of May, the United States honors its heroes who made the ultimate sacrifice while serving in the United States Armed Forces. And how does a nation celebrate its martyrs who fell defending the core principles of liberty, democracy, and free markets? You guessed it; by exercising the freedom to choose and lead the good life.
Moreover, with the long weekend coinciding with the onset of summer, most Americans look forward to spending time outdoors. And that can only mean one thing: increased consumption. Think camping, cookouts, weekend trips, and home improvement projects.
All that activity translates to increased expenditure for businesses in relevant categories. A few have historically witnessed boosted top-line performance and an uptrend in stock prices at this time of the year.
Moreover, with still enough pent-up demand from the pandemic to go by and a jump of 0.8% in spending in April, with personal consumption expenditure beating estimates to rise 0.4% for the month despite 10 consecutive interest-rate hikes by the Federal Reserve, history seems more than likely to rhyme, if not repeat itself.
Here are a few stocks that could benefit from the holiday tailwind.
Tesla, Inc. (TSLA)
The global e-mobility pioneer’s automotive segment includes the design, development, manufacturing, sales, and leasing of electric vehicles as well as sales of automotive regulatory credits.
Although the company has recently increased the price of the vehicles in the U.S., China, Canada, and Japan, they remain lower than at the start of the year due to several rounds of price cuts worldwide.
In the recent earnings call, TSLA’s maverick CEO Elon Musk signaled that the automaker will be targeting larger volumes of sales versus higher margins but said he expects the company “over time will be able to generate significant profit through autonomy.”
Moreover, since TSLA’s energy generation and storage segment includes the design, manufacture, installation, sales, and leasing of solar energy generation and energy storage products such as the Solar Roof and Powerwall, the stock could also be a home-improvement play this Memorial Day.
In 2022, TSLA’s price return during the fortnight around Memorial Day amounted to 4.3%, compared to 3.4% for the S&P 500.Visa Inc. (V)
Despite a slump in mortgage demand due to rising borrowing costs, total consumer debt hit a fresh new high in the first quarter of 2023, surpassing $17 trillion. Moreover, as consumers remain keen to give their mundane inflation worries a break during the first long summer weekend by splurging now to pay later, that figure is not coming down anytime soon.
The global payments technology company that connects consumers, merchants, financial institutions, businesses, strategic partners, and government entities to electronic payments is well-positioned to benefit from this tailwind.
Lowe’s Companies, Inc (LOW)
With new home purchases softening amid rising mortgage rates, home improvement projects will keep homeowners of an aging U.S. housing stock busier than usual this summer. Hence, with more than two-thirds of sales contributed by non-discretionary purchases, such as new appliances to replace broken ones, the home improvement retailer is best positioned to make a tailwind out of this turbulence.
In 2022, LOW’s price return during the fortnight around Memorial Day amounted to 4.9%, compared to 3.4% for the S&P 500.
Expedia Group, Inc. (EXPE)
With the pandemic firmly in the rear-view mirror and consumers ever keener to redeem their pile of airline miles on other travel rewards on their credit cards through revenge travel, global online travel company EXPE is well-positioned to benefit from this pent-up demand.
In 2022, EXPE’s price return during the fortnight around Memorial Day amounted to 8.3%, compared to 3.4% for the S&P 500.
Camping World Holdings, Inc. (CWH)
For Americans who find the great outdoors and road trips more akin to their idea of freedom and the spirit of adventure, CWH sells recreational vehicles (RVs) and related products and services.
Through its two segments, Good Sam Services and Plans; and RV and Outdoor Retail, CWH offers extended vehicle service contracts; roadside assistance plans; property and casualty insurance programs; travel protection and planning; and RV and outdoor-related consumer shows. Moreover, it produces various monthly and annual RV-focused consumer magazines; and operates the Coast to Coast Club.

After registering two consecutive months of declines of 0.2% and 1%, on May 16, the advance sales report showed a recovery of 0.4% in retail sales for April. However, this modest rebound missed the Dow Jones estimate of a 0.8% increase. In this article, we will explore what this tepid growth means for the prospects of brick-and-mortar stores in today’s economy.
U.S. domestic consumption has been on a roller coaster ride over the past three years. People have gone from not being free enough to spending practically-free money to spend like there’s no tomorrow.
That, in turn, led to a not-so-transitory inflation, the hottest since the 1980s, forcing the Federal Reserve to implement ten successive interest-rate hikes in a little over a year to take the Fed funds rate to a target range of 5% to 5.25%.

With the stash of stimulus cash fast dwindling, average American consumers have been forced to rein in their urge to splurge to prevent inflation from biting harder. The Survey of Consumer Expectations for April carried out by the New York Fed showed that the outlook for spending fell by half a percentage point to an annual rate of 5.2%, the lowest since September 2021.
Could online retailers fare better with a complementary offline presence?

Yes
No
Can’t Say

While consumption may be undifferentiated from a macroeconomic perspective, businesses have evolved to tailor their offerings to cater to various consumer segments. Despite current economic uncertainties and hardships, high-income segments have been relatively unaffected, with affluent patrons queueing up for finer things in life on offer from the likes of Tiffany & Co. and LVMH.
However, middle-income consumers have been forced to go bargain hunting to squeeze out the maximum possible value from money which has gotten dearer. Hence, they have been forced to trade down to budget-friendly retailers, leaving the businesses that offer something in between wrong-footed and stranded.
The divergent prospects between off-price retailers and their middle-of-the-road peers are evident from the Street expectation regarding business performance. The fiscal first quarter revenues of Burlington Stores, Inc. (BURL) are expected to grow by 13% year-over-year compared to an 8.7% year-over-year decline at Macy’s, Inc. (M).
Although budget retailers have lost sales from low-income consumers, that loss has been offset by increased business from the middle-income consumer segment.
As a result, Walmart Inc. (WMT)is expected to have grown by 4.5% year-over-year in Q1, compared to 2.4% for Albertsons Companies, Inc. (ACI)and 1.3% for Albertsons Companies, Inc. (ACI)The Kroger Co. (KR).
While the jobless rate for April fell to 3.4%, tied for the lowest since May 1969, the likelihood that the unemployment rate will be higher a year from now has increased to 41.8% as hiring has slowed and layoffs have ticked up.
Moreover, with consumer debt taking its lead from sovereign debt and pushing past $17 trillion to come in at an all-time high, the polarization is expected to increase even further.

Although inflation has moderated from its decades-high level around this time last year, weak consumer demand led The Home Depot, Inc. (HD)to post the worst revenue miss in two decades.
A decline of 0.3 percentage points in the overall outlook for inflation over the next year suggests that things could improve, but probably not before they worsen.

California-based chip designer NVIDIA Corporation (NVDA) has had an outstanding 2023. The stock has continuously outperformed the S&P 500 and more than doubled year-to-date.
The company went public on January 22, 1999. However, it was not until the pandemic that the tailwind of crypto mining resulted in a surge in demand for its chips and the stock price. This time around, NVDA is riding the waves of Generative AI and Large Language Models (LLMs) that began with the release of ChatGPT to the general public towards the end of the last year.
NVDA is set to release its financial results for the first quarter of the fiscal year 2024 after the bell on May 24. To understand how the business would fare and how its stock price could be impacted after and beyond the upcoming earnings, let’s understand how the global provider of graphics, computation, and networking solutions has grown from being a major player in the gaming industry to an AI giant.
During the dawn of the PC revolution, NVDA’s founder and CEO, Jensen Huang, realized the emergent applications and demand for accelerated computation on the horizon and designed its first high-performance graphics chip in 1997. However, given the relative scarcity of use cases, the fledgling chip designer chose to bet on visual effects and gaming and struck the jackpot.
In 1999, the company launched what it claims to be the first programmable graphics card, the GeForce 256, and popularized the term, Graphics Processing Unit (GPU). In 2000, the company was the first exclusive graphics provider for Microsoft and Xbox.
Since then, these GPUs have become the mainstay of high-resolution gaming and animation to form the primary business of NVDA and contribute around 80% of its revenue.

Moreover, crypto miners hoarded and bid up these gaming GPUs at the peak of crypto-mania. However, with the onset of crypto winter due to rising interest rates and increased regulation risk, those GPUs flooded back into the market. The resulting oversupply led to a 46% year-over-year decline in gaming revenue.For the fiscal year that ended January 29, 2023, NVDA’s revenue remained almost flat at $26.97 billion, while its gross profit declined 12.1% year-over-year to $15.36 billion. The company’s non-GAAP operating income decreased 28.8% year-over-year to $9.04 billion during the same period.Its non-GAAP net income decreased 25.7% and 24.8% year-over-year to $8.37 billion, or $3.34 per share.
However, the company was all in on the next big thing by then. In 2006, NVDA made its foray into parallel (and consequently faster) computing by releasing a software toolkit called CUDA.
Parallel computing was ideal for artificial neural networks’ deep (machine) learning. Hence the kit was first used in AlexNet, a revolutionary AI at the time. This set off a chain reaction that has propelled the company to the center stage of the AI boom.
Fast-forward to today, and NVDA is reaping the rewards for its investment in Artificial Intelligence as its A100 chips, powering LLMs like ChatGPT, have become indispensable for Silicon Valley tech giants.
As a result, the accelerated adoption of its A100 chips due to the AI boom NVDA offset the 20.8% year-over-year decline in revenue due to the gaming slump and reported an EPS of $0.88 to beat its earnings expectations in its previous quarterly earnings release.
Near-Term Prospects
Analysts expect NVDA’s revenue and EPS for the first quarter of fiscal 2024 ended April 30, 2023, to decline 21.4% and 32.4% year-over-year to $6.52 billion and $0.92, respectively.
However, given the fact that the stock is currently trading at 68.57x its forward earnings, which is 224.6% above the industry average of 21.13x and above its 50-day and 200-day moving averages, it could take a monumental outperformance to move the needle that has already been raised by high expectations.
Looking Beyond
For fiscal 2024, NVDA’s revenue and EPS are expected to increase by 11.5% and 36.2% year-over-year to $30.07 billion and $4.55, respectively. Both metrics are expected to keep increasing over the next two fiscals.
Beyond gaming and AI, NVDA’s experience has been mixed. In 2010, it made an unsuccessful foray into smartphones with the Tegra line of processors. In 2020, it closed the long-awaited $7 billion deal to acquire data center chip company Mellanox. However, in 2022 it had to abandon its bid to acquire Arm, citing regulatory challenges.
However, there are enough reasons to be excited about the company’s prospects. With NVDA’s presence in data centers, cloud computing, and AI, its chips are making their way into self-driving cars, engines that enable the creation of digital twins with omniverse that could be used to run simulations and train AI algorithms for various applications.
Even its previously unsuccessful Tegra processors have found a new lease of life in logistics robots and driverless cars.

Potential Risks
Other than the risk of backward integration posed by companies such as Apple Inc. (AAPL) and Tesla Inc. (TSLA) designing their own chips, perhaps the only thing that could keep an NVDA investor awake at night is that fact that it is committed to remaining a fabless chip designer to keep capital expenditure low.
Moreover, almost all of the manufacturing has been outsourced to Taiwan Semiconductor Manufacturing Company Ltd. (TSM), which is yet to diversify significantly outside Taiwan.
Bottom Line
Given the stock’s sky-high valuation and bullish prospects amid the background of concentration and geopolitical risks that are in the process of being mitigated, it could be wise to hold on to NVDA and hope for the status quo on the Taiwan Strait, at least over the next two to three years.

For the stock of Beyond Meat, Inc. (BYND), seemingly on a one-way descent, its high of $186.83 on January 26, 2021, seems like a distant memory. The precipitous decline in the company’s stock price has reflected the alarming decline in its top line, which is more than the category average due to the inflation-led slowdown.
Founded in 2009 by its CEO Ethan Brown, BYND targeted meat eaters with plant-based products that replicate animal meat in look, feel, and taste. The company partnered with grocery and restaurant chains to increase the reach and visibility of its products.
In the interest of sustainability, which of the following options would you prefer?

Consuming regular quantities of plant-based meat
Consuming animal protein in moderation and on occasions

The hype surrounding the brand, further accentuated by big-name celebrity endorsements, helped the company’s stock make a strong market debut in 2019.
However, the company’s single-minded pursuit of growth and expansion through innovative offerings came in lieu of mounting debt and cost overruns.
Moreover, the company’s tendency to overpromise and underdeliver also didn’t help. As a result, the company had to switch its priority from growth at any cost to sustainable growth with healthy cash flows.
However, this attempt to scale down while moving forward has resulted in revenue decline, loss of market share to competitors, and a consequent slump in share price.
While BYND deals with its struggles and charts an arduous path to profitability, here are some alternative food stocks to consider.
Nestlé S.A. (NSRGY) is a global nutrition, health, and wellness company. The company’s segments include Europe, the Middle East, and North Africa (EMENA); Americas (AMS); Asia, Oceania, and sub-Saharan Africa (AOA); Nestle Waters; Nestle Nutrition; and Other Businesses.
NSRGY’s offerings include powdered and liquid beverages; water; milk products, and ice cream; nutrition and health science; prepared dishes and cooking aids; confectionery; and PetCare.
In 2017 NSRGY acquired Sweet Earth, a Calif.-based vegan foods manufacturer. In 2019, Sweet Earth announced the launch of its new vegan burger product, Awesome Burger, and its ground beef component, Awesome Grounds. Both products are currently distributed to supermarkets, restaurants, and universities.
For the fiscal year 2022, NSRGY’s total reported sales increased by 8.4% to CHF 94.4 billion ($104.66 billion), with organic growth coming in at 8.3% year-over-year. The company’s underlying EPS increased by 8.4% to CHF 3.42 during the same period.
For the first three months of 2023, NSRGY’s total reported sales increased by 5.6% year-over-year to CHF 23.5 billion ($26.05 billion). Organic growth came in at 9.3%, while acquisitions had a net positive impact of 0.3%.
Hormel Foods Corporation (HRL)develops, processes, and distributes a range of branded food products globally. The company operates through three segments: Retail, Foodservice, and International.
Back in 2019, HRL forayed into products that reduced meat consumption with its “Fuse Burger,” made from ground turkey and rice.
Despite a challenging start to the fiscal year 2023, persistent impact from inflationary pressures, supply chain inefficiencies, and lower-than-expected sales volumes, HRL’s sales and operating income for the first quarter came in at $3 billion and $289 million, respectively. The company’s diluted EPS came in at $0.40.
Tyson Foods, Inc. (TSN) is a protein-focused food company whose segments include: Beef; Pork; Chicken; and Prepared Foods.
In 2019, the company launched its line of meat-free and blended protein products called Raised & Rooted. After starting with nuggets made from a blend of pea protein powder and other plant ingredients, the brand diversified into blended burgers made with a combination of plant-based ingredients and Angus beef.
For the second quarter of fiscal year 2023, TSN’s sales demonstrated a marginal increase to $13.13 billion. On May 11, the company declared a quarterly dividend of $0.48 and $0.432 per share on its Class A and Class B common stock, respectively. The dividends would be paid out on September 15, 2023, to shareholders of record at the close of business on September 1, 2023.

With the U.S. Treasury set to exhaust its workarounds and run out of options to manage the national debt until the self-imposed debt ceiling is raised or suspended, the world’s richest economy, which also issues the global reserve currency, is projected to run out of cash and fail to meet its obligations as early as June 1.
While Treasury Secretary Janet Yellen has deemed it ‘unthinkable’ to let the U.S. default on its debt and has urged lawmakers to set their differences aside to ensure that “America should never default.”
However, with Republicans such as Donald Trump playing hardball and endorsing the notion of letting the nation default if Democrats don’t agree to spending cuts, it’s probably fair to say that Ms. Yellen’s words are going largely unheeded.

Given that the alternatives to raising or suspending the debt ceiling, like the U.S. has done almost 80 times since the 1960s, seem either unviable or unattractive, the extent to which the U.S. and global economy could be undermined if the default comes to pass would, in the words of Yellen, be an “economic catastrophe.”
With business leaders such as Jamie Dimon convening a ‘war room’ over the debt ceiling standoff, even the markets have begun pricing in the worst. The S&P 500’s net loss since the beginning of the month could only worsen further the longer the crisis drags on.
Do you see the U.S. defaulting on its debt this time?

Yes
No
Can’t Say

However, the sliver of silver lining that could encourage investors alarmed by the looming cloud of fat tails is that if the worst comes to pass, it would also mean a potential devaluation of the U.S. dollar.
This could be a significant tailwind for the export prospects of technology stocks, which have been under pressure due to 10 interest-rate hikes over the past year and are witnessing a watershed due to the advent of generative artificial intelligence.

Towards the end of last year, China surprised the world with an abrupt pivot away from the strict restrictions of its long-espoused “Zero-Covid” policy., including quarantine requirements for inbound visitors. Despite an initial surge in infections, global businesses rushed in, hoping to cash in on the economic recovery.
Sentiments were further boosted by steps to stimulate economic growth and domestic consumption, mapped during and around the annual Central Economic Work Conference. These steps also helped ailing Chinese developers ease their liquidity strains and revive home purchases.
These measures seem to be working. According to the data released by China’s National Bureau of Statistics on April 18, the country’s GDP grew by 4.5% in the first quarter of the fiscal year. This was better than the forecast of 4% and the highest growth since the first quarter of last year.

Six months on, while the country is still open for business, the momentum has visibly slowed. While China’s exports in April grew by 8.5%, the country’s imports declined by 7.9% year-over-year as growth in the service sector softened, and manufacturing contracted again in three months.
With the 50-mark separating growth and contraction, the Caixin/S&P Global services purchasing managers’ index fell to 56.4 in April from 57.8 in the previous month, and the Caixin China general manufacturing purchasing managers’ index fell to 49.5 in April.
China’s top leaders have also taken note. A translated state media readout of the Plitburo meeting said, “At present the positive turn in China’s economy is primarily one of a recovery. Internal drivers still aren’t strong, and demand is still insufficient.”
As a result of this patchy growth, analysts at Morgan Stanley foresee a significant dip in demand and output of Chinese steel that could result in a 28% decline in iron ore prices by the end of 2023.
With markets mirroring this moderation, Citi has pushed back its stock rebound forecasts, and its analysts expect Hang Seng to take until the end of September to reach 24,000.
Moreover, more significant concerns are looming on the horizon. With China’s National Bureau of Statistics reporting that the population dipped to 1.412 billion last year from 1.413 billion in 2021, the country’s demographic dividend for the past two decades threatens to turn into a demographic decline.
Despite abolishing its one-child policy in 2016 and scrapping childbirth limits in 2021, China still struggles to boost its declining birth rate.
Would China be able to dethrone the U.S. as the largest economy before its population ages significantly?

Yes
No
Can’t Say

Additionally, economic cooperation has taken a backseat, with competition between U.S. and China degenerating into conflict. According to an IMF forecast, escalating tensions between the two superpowers could cost the global economy 2% of its output.
This has impacted the stocks of American businesses as well.
NIKE, Inc. (NKE) and other apparel manufacturers are currently stuck between a rock and a hard place. A House committee examining the U.S. government’s economic relationship with China has asked the company and its peers, such as ADIDAS AG (ADDF), Temu, and Shien, to furnish information by May 16 regarding the use of forced labor during production.
If the use of materials and labor sourced from the Xinjiang Uyghur Autonomous Region of China could be proven, it would violate U.S. trade law under the 2021 Uyghur Forced Labor Prevention Act.
Back in China, consumers’ backlash over foreign brands’ stance on Xinjiang cotton and Covid-19 has had them scrambling to limit the damage by touting hyper-local and patriotic strategies in a bid to prevent local competitors from making further gains.
Starbucks Corporation (SBUX) surpassed profit estimates due to the Chinese recovery. However, the company’s guidance has ended up fanning investors’ anxieties. The company reported that after a “faster than expected” recovery in the first three months of 2023, average weekly sales in China have started to moderate.
Although revenge spending after years of strict restrictions mellowing down into a moderate growth rate is nothing out of the ordinary, the management commentary was enough to sink the stock by about 6% following the earnings call.

The U.S. maker of heavy equipment for the mining, construction, and energy industries Caterpillar Inc. (CAT), posted a lower-than-expected profit for the first time since the beginning of the pandemic owning to increased raw material costs.
More importantly, CAT’s warning about weaker demand for its machines in China, which accounts for 5 to 10% of the company’s sales, spoiled the mood on the street has sent its shares tumbling.
Bottomline
Although U.S. and Chinese businesses have benefited from pent-up demand unleashed during the first quarter of the year following the opening up of its economy, investors would be wise to treat it like an exceptional windfall rather than a lasting tailwind. That would help them adjust their expectations in favor of modest growth and perhaps even an occasional contraction during the latter half of this year.